Just Energy announces security holders’ OK of recapitalization plan

By Wendy Van Sickle

Columbus, Ohio, Aug. 27 – Just Energy Group Inc. said its recapitalization plan was approved at special meetings of security holders held Thursday, according to a news release.

The plan was approved by holders of 99.35% of the company’s senior unsecured debt, 87.66% of its convertible debentures and 94.92% of its shares.

The company said the recapitalization is part of a comprehensive plan to strengthen and de-risk its business and position Just Energy for sustainable growth.

“The recapitalization significantly improves Just Energy’s financial flexibility with an equity injection of over $100 million and reduces net debt and preferred shares by approximately C$520 million,” according to the news release.

“The strong support we received from all security classes is a clear indication of their alignment with our future direction, including a stronger financial position and improved liquidity,” said Scott Gahn, Just Energy’s president and chief executive officer. “Our focus now firmly remains on improving our operations, growing our business, and continuing to provide high quality services to our customers.”

As part of the recapitalization, stakeholders voted for a reconstituted board of directors for Just Energy, with seven directors, including five new directors. The reconstituted board will assume its responsibilities upon the implementation of the recapitalization, which is expected in September.

Under amendments to the recapitalization announced on Wednesday, the company said it will:

• Pay accrued and unpaid interest in cash on the subordinated convertible debentures until the recapitalization closes;

• Issue C$15 million of new subordinated notes to holders of the convertible debentures, which will have a six-year maturity and bear interest of 7%;

• Pay certain expenses of the ad hoc group of convertible debenture holders; and

• Issue C$3.67 million of common shares in an additional private placement to the company’s term loan lenders at the same subscription price available to all security holders pursuant to the new equity subscription offering, proceeds of which will partially offset the incremental cash costs noted above.

All other terms remained unchanged.

As previously reported, the proposed plan included:

• Exchange of C$100 million 6.75% subordinated convertible debentures due March 31, 2023 and C$160 million 6.75% subordinated convertible debentures due Dec. 31, 2021 for new common equity;

• Extension of C$335 million credit facilities by three years to December 2023, with revised covenants and a schedule of commitment reductions throughout the term;

• Existing senior unsecured term loan due Sept. 12, 2023 and the remaining convertible bonds due Dec. 31, 2020 will be exchanged for a new term loan due March 2024 with initial interest to be paid-in-kind and new common equity;

• Exchange of all 8.5% fixed-to-floating rate cumulative redeemable, perpetual preferred shares into new common equity;

• New cash equity investment commitment of C$100 million; and

• Initial reduction of annual cash interest expense by about C$45 million.

In total, the recapitalization will result in a reduction of about C$535 million in net debt and preferred shares.

Just Energy is a Toronto-based retail energy provider.

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